Saturn's aims sound in present telco enviroment

I was thinking about death. It happened while I was sitting in possibly the coolest reception area I've seen, at Saturn Communications in Petone. The death thing came about because on the multiple "entertainment centres" dotted around reception showing off the company's cable TV options, Kurt Cobain was on MTV and Marilyn Monroe was on the movie channel. So there was an element of whimsy about the whole thing.

I was thinking about death. It happened while I was sitting in possibly the coolest reception area I’ve seen, at Saturn Communications in Petone. The death thing came about because on the multiple “entertainment centres” dotted around reception showing off the company’s cable TV options, Kurt Cobain was on MTV and Marilyn Monroe was on the movie channel. So there was an element of whimsy about the whole thing.

Saturn is an interesting company, primarily because the people there seem to have a healthy but realistic attitude toward the market they are entering. Not only that but the technology being used to implement their designs is at the absolute cutting edge.

CEO Jack Matthews is keen to point out that Saturn is not simply a pay TV company but a “network” company whose aim in life is to leverage as many revenue streams as possible from the infrastructure in place. What this means is diversification into be-coming a telecomms provider, a bandwidth provider and, possibly, some form of Internet provider.

At the moment the company is concentrating on building a pay TV service in the Wellington region, which involves taking on Sky. Says Matthews: “Sky is very effective at what it does, but essentially it is an example of a network company enhancing a straightforward technology that has been available since the 50s.” Matthews puts Saturn’s market penetration at about 16% to 17% in its target region.

Voice is Saturn’s next big thing. A five-year interconnection agreement was sign-ed with Telecom in May, but needless to say this brings its own problems, ones that are repeated more often than I care to think about in this column.

“There are no constraints on Telecom,” says Matthews. “So there is a problem for every new entrant into this market. That is not to say that we don’t think we can make a dollar out of it, because if we didn’t think we could we wouldn’t be investing.”

The problem as Matthews sees it is that the only advantage open to a new player is to have its own network, but this is neither a small nor inexpensive option. “There is unanimous view that the Commerce Act needs to be revised. There needs to be a lower burden of proof of anti-competitive behaviour, and harsher penalties. At the end of the day the penalties in place at the moment do not discourage anti-competitive behaviour, because the penalties are low compared to the rewards.”

Matthews is not as harsh as some others about the number portability deal recently signed by Telstra and Telecom. He suggests the costs are not over the top for a short-term solution, but it is certainly not an appropriate long-term solution.

Saturn has invested heavily in the upcoming move into the telco market. The company has purchased two NorTel switches, the first in the country, and has just sealed a $2 million technical facility with a view to being operational by mid- December.

Matthews is suitably discreet about what services are going to be offered over and above those currently available from the other telcos. One thing that will be on offer is a full telco service — local and international calls.

The way Matthews sees it is that Saturn is going to be a niche provider, but he is aware of the fact that a niche market should not mean reduced functionality. “Our niche is size of market and functionality,” Matthews says.

Concluding with the entertainment theme that we started on, Matthews gives his vision of how Saturn will be seen by the customers. He recalls the scene in the Wizard of Oz where Dorothy finally meets the Wizard. The Wizard, you may recall, was an old man standing in front of a vast array of pipes and valves. Matthews realises that customers doesn’t really care about the pipes or the valves, they just want the service. Matthews intends to hide the pipes.

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